That’s mainly because of the rise of hyperscale cloud players — specifically Amazon, Facebook, Google, and Microsoft. Their buying power has grown substantially in the past few years — and white boxes have progressed rapidly during that time, too.
The result is an unprecedented moment of volatility for the Ethernet market, as Weckel told the Ethernet Technology Summit on Thursday. Some big deals will be up for grabs.
“A year from now, we’re going to be shocked, absolutely shocked, [regarding] who goes for what vendor and why,” he said, referring specifically to those four big players. “I’m going to be shocked. Everybody in this room is going to be shocked. There’s absolutely a ton of opportunity here.”
What made his statement provocative was that the hyperscale players seem to have settled on their switching choices. Google is a white box fan, and Amazon has become one; Microsoft, largely due to Azure, has been the largest customer of Arista Networks; and Facebook, with the Wedge design, seems intent on building its own switches, at least for the data-center edge.
Hyperscale Purchasing Power
Weckel focused on those four companies because they’re the largest of the cloud providers, each running more than 1 million servers. (Baidu should join their ranks soon, he added.) They all seem poised to continue growing, and their buying power is something the technology industry can’t ignore.
“Google buys more [servers] in one quarter than eBay’s entire installed base. Probably more than Verizon’s entire installed base,” Weckel said. And Google’s switch deployments, if counted as one “vendor,” would be No. 2 in the industry, smaller only than Cisco, he said.
Another example of the power of hyperscale purchasing: In the third quarter of 2014, sales of 40-Gb/s Ethernet ports on white boxes skyrocketed to 300,000, blowing away the 40-Gb/s volumes of Cisco and Arista, the top two contenders. That was all because one hyperscale player — Weckel didn’t say which one — made the transition to 40 Gb/s.
Vendors should take notice, because the networking industry wasn’t built to serve this type of customer, Weckel said.
Until now, Ethernet switches had been an enterprise product designed for breadth. You sold one box to many customers, attracting them with varying permutations of features.
But hyperscale data centers don’t want the equipment that’s used in the enterprise data center. High density servers, for example, are crucial in hyperscale circles and exist as a product category solely because of that demand, Weckel said.
The key for networking vendors, then, will be to replace Ethernet’s breadth with specialization. “Those vendors that focus will do incredibly well in this space,” Weckel said.
Weckel forecasts the data-center switching market will grow to $14 billion in 2019 from $9 billion today, with the top seven cloud providers will representing the majority of that growth. It’s a specialized category that the Ethernet switching industry will have to learn to serve.